Decisions of the Swiss Federal Supreme Court (calendar week 42)

Overview of the tax rulings of the Swiss Federal Supreme Court published in the week of October 16 - 22, 2017.

Judgment of 21 September 2017 (2C_756/2017): Direct federal tax and state taxes 2014 (Basel-Stadt); late objections will be rejected in accordance with Art. 133 para. 3 in conjunction with Articles 140(4) and 145(4) 2 DBG only occurred if the taxpayer proves that he was prevented from submitting the objection in time due to military or civilian service, illness, absence from the country or other significant reasons (material prerequisite) and that the objection was submitted within 30 days after the reasons for the hindrance ceased to exist (formal prerequisite); the erroneous assumption that court holidays prevailed in the direct tax appeal proceedings does not justify a reason for restitution; the lower court did not violate federal law by omitting to state in the instructions on appeals whether the judicial vacations were (non-)applicable; the question of whether cantonal "judicial vacations" are permissible at all in the area of harmonised tax law could be left open in the present case, particularly since the Basel-Stadt Constitutional and Administrative Justice Act does not provide for judicial vacations (§ 21 para. 2 VRPG/BS); rejection of the complaints, insofar as they were brought to light.

Judgment of 21 September 2017 (2C_1013/2016): Request for review of the decree on the increase of the imputed rental value (Aargau); the complaint in matters of public law was answered - with reference to the practice of the Federal Supreme Court, according to which judgments concerning cantonal decrees or enactments whose challenge at cantonal level is possible for an unlimited period of time (in this case pursuant to § 70 para. 1 VRPG/AG), can only be challenged before the Federal Supreme Court if the cantonal procedure for reviewing the legislation has been raised within the "usual period for appeal" of 30 days after the entry into force of the contested ordinance - this did not occur due to the failure to observe the deadline; Whether the lower court, in view of the above-mentioned federal court practice, was allowed to provide its ruling with the regular information on appeals was left open in casu, especially since the complainant could have withdrawn the appeal after becoming aware of the hearing of the respondent in the federal court proceedings and the futile approach to the federal court could be taken into account by waiving the charging of procedural costs; the court fee imposed on the appellant by the lower court cannot be described as arbitrary due to the increased expense, the complex matter and the scope as well as the differentiated structure of the reasoned judgment; dismissal of the subsidiary constitutional complaint against the cost decision of the lower court

Judgment of 26 September 2017 (2C_86/2017, 2C_87/2017): Direct Federal Tax and Cantonal and Municipal Taxes 2009 (Berne); according to settled federal court rulings, only those of a predominantly provident nature are covered by the similar lump-sum settlements within the meaning of Art. 17 para. 2 DBG; the question of whether the capital benefit paid out in the present case is ordinary income from employment within the meaning of Art. 17 para. 1 DBG and is subject to the ordinary rate of income tax, or whether it is a lump-sum settlement of a predominantly provident nature mentioned above, which is paid separately and at the privileged rate pursuant to Art. 38 DBG is to be taxed, is assessed on the basis of the overall circumstances; in the case of lump-sum settlements based on a contractual obligation, the intentions of the contracting parties are decisive; in casu there is a lack of a predominantly provident nature, especially since between the contracting parties the benefit is consistently referred to as profit sharing and the description of purpose and the calculation of the payment suggest that the main purpose of the lump-sum benefit was to reward many years of loyalty to the company and the improvement of the pension situation is to be regarded merely as an intended side effect; dismissal of the complaints.